China Has Its Eye On Canada's Oil

Energy: While the U.S. dithers with concerns about "dirty oil" from Alberta's rich tar sands, energy-hungry China makes Ottawa an offer it might not refuse. Memo to Washington: Pipelines can run west as well as south.

When President Obama pledged to wean us off foreign oil, we hoped he didn't mean our friendly ally to the north, Canada. Granted, it doesn't have beaches like Rio, where we're helping the Brazilians drill offshore, but we had hopes nonetheless.

Together, the U.S. and Canada have enough oil and natural gas locked up in shale formations, tar sands, Alaska, the Canadian Arctic and the Outer Continental Shelf to make OPEC pound sand. But we won't drill for ours and apparently, we don't want Canada's.

With more than 170 billion barrels, Alberta has the world's third-largest oil reserves, behind only Saudi Arabia and Venezuela and ahead of Russia and Iran. Daily production of 1.5 million barrels from the oil sands is expected to nearly triple to 3.7 million by 2025. The only question is, will this crude be flowing south to U.S. refineries or west for export to China?

At issue is the Keystone XL pipeline, parts of which have already been built, that would bring Alberta oil to Texas Gulf Coast refineries. The pipeline also could transport oil extracted from shale formations in the Rocky Mountain West.

The U.S. Geological Survey estimates the region, dubbed the Persia of the West, may hold more than 1.5 trillion barrels of oil, six times the proven reserves of Saudi Arabia, and enough to meet U.S. oil needs for the next two centuries.

By 2015, oil executives and industry analysts say, the oil-rich lands of the West, including North Dakota's booming Bakken formation, could produce 2 million barrels a day, more than the pre-Deepwater Horizon production rate in the Gulf of Mexico.

Michigan's Fred Upton, the Republican chairman of the House Energy and Commerce Committee, estimates the pipeline would create at least 100,000 jobs. So what are we waiting for?

Environmental groups oppose Keystone XL on the grounds that tar-sands extraction harms the environment through water pollution, greenhouse gas emissions and potential pipeline leaks. The State Department, which must approve any pipeline entering the U.S. across international borders, has withheld its approval pending a final decision Nov. 1.

The Chinese aren't waiting. Sinopec, a Chinese state-controlled oil company, has a stake in a $5.5 billion plan to build the Northern Gateway Pipeline from Alberta to the Pacific Coast province of British Columbia. Alberta Finance Minister Lloyd Snelgrove met this month with Sinopec and CNOOC, China's other big oil company, and representatives of China's banks.

American oil companies, accused by the Obama administration of restricting supplies to increase profits, are willing to get the oil. Exxon is spending upward of $8 billion of its profit on the Kearl oil sands project in Alberta. Kearl is part of the Athabasca oil sands in the northeastern corner of that province, near Fort McMurray. Firms need a way to get the oil to the U.S. market.

Will the Obama administration risk offending its environmentalist base by compromising on its commitment to green energy? It would also be hard to explain the importation of Canadian oil via a pipeline running near America's vast untapped shale oil resources.

It just might be that as gas prices soar to $5 a gallon, Canadian oil will flow to China's military-industrial complex, but not here as America's hope for energy independence proves to be nothing more than a pipe dream.

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